Enron Collapse Viewed as Possible Major US Political Scandal - 2002-01-15

Another political scandal is brewing in Washington. This one involves the collapse of the nation's largest energy trading company, Enron, and its ties to the Bush administration.

It is still too early to tell how damaging the revelations about Enron will prove to be.

Congressional investigators say they will initially focus on how Enron's high-level executives apparently sought to hide the company's fast-deteriorating financial situation from both stockholders and employees. The result was that those who invested in company stock were left with little or nothing in their retirement funds.

But opposition Democrats are also savoring the chance to examine Enron's political and financial ties to the Bush administration. Enron's Chief Executive Officer, Kenneth Lay, was one of the top contributors to President Bush's campaign in 2000. Democrats also say they will take a close look at telephone calls Mr. Lay made to two Bush cabinet members seeking help as his company plummeted toward bankruptcy late last year.

"If there was any, any involvement because of the incredible help the Bush campaign got from Enron here, it will be, and I don't know that there has been, but it will be devastating," said Democratic Senator Joseph Biden of Delaware.

President Bush says he never discussed Enron's problems with Kenneth Lay. And White House officials say the administration did nothing to help Enron even after telephone calls from Mr. Lay to Treasury Secretary Paul O'Neill and to Commerce Secretary Don Evans.

"I was not offended by the call at all. He was doing what he thought was in the best interest of his shareholders," Mr. Evans said on NBC's Meet the Press. "He was looking for all the possible ways he could stabilize his company."

Revelations that Enron officials sought help from the Bush administration could cause the Republicans some political problems in the short term. University of Virginia political analyst Larry Sabato says the controversy could revive a long-standing criticism that Republicans too often favor corporations over the average citizen.

"It is the oldest stereotype currently operating in American politics, dating from 1932," he said. "And it is the stereotype that suggests that the Republican Party is the party of big business, that they help the corporate class, the big boys who are out to screw the little people. If ever there were a case of that, it was Enron, where the executives made millions while they prevented average people from saving their retirement accounts."

But in the long term, Democrats could wind up paying a political price over the Enron scandal as well. Although most of the company's political contributions went to Republicans, some prominent Democrats in Congress also received thousands of dollars in contributions, including some of those preparing to lead congressional inquiries into the Enron matter.

Analyst Larry Sabato says Enron's outreach to both political parties is bound to fuel the public's ever-present cynicism about politics in general. "That all politicians are crooks and they are all bought," he said. "And certainly the Enron incident lends credence to that. The Republicans got 73 percent of the money, but almost all the major Democrats got thousands of dollars and the Democratic National Committee and associated committees got hundreds of thousands from Enron."

Meanwhile, supporters of reforming campaign finance laws have seized on the Enron case as the latest example of a system that needs to be fixed. "Tens of thousands, hundreds of thousands of dollars went from Enron to the political parties, both political parties, and that is what we have got to put an end to, to stop these kinds of appearances of impropriety that are created and the sale of access," said Senator Carl Levin, Democrat from Michigan on ABC's This Week program. "I have no doubt that Enron had greater access because of huge campaign contributions."

Political analyst Larry Sabato says the Enron scandal makes it more likely that some form of campaign finance reform will be passed this year. The Senate approved a sweeping reform measure last year but a similar bill has been blocked from consideration in the House of Representatives for the past several months.